Projecting demand and supply of labour by educationExperiences from Norway

BJORN DAPI, HEGE MARIE GJEFSEN AND NILS MARTIN STØLEN

Main modules

• Demographic projections

◦ Annual cohort-component model

• Macroeconomic projections by main industries

◦ Quarterly/annual model based on National Accounts and econometric connections

• Change in composition of employment in each industry

• Projections of labour supply by qualification/education

◦ Annual dynamic microsimulation model, but sufficient with a cohort-component model

• Further information: Reports 2016/31

◦ https://www.ssb.no/arbeid-og-lonn/artikler-og-publikasjoner/education-specific-labour-force-and-

demand-in-norway-in-times-of-transition

Other main information

• Long traditions for projections at Research Department of Statistics Norway

◦ Macroeconomic projections since the early 1980s

◦ Projections of labour supply by education since the 1970s

◦ Projections of demand and supply of labour by education since the early 1990s

• Labour market projections with a scope of about 15 years

• Prepared every third or second year on demand from relevant Ministries

Labour classification

• Dependent on available statistics

• Classification by occupation common for analyses of demand for labour

• Skills or education more relevant for analyses of supply

• Your occupation may change when you start in a new job

• Skills and education more fixed

• More distinct borderlines between different educations than occupations

• In Norway level and fields of education from administrative registers

How many detailed groups?

It depends on:

• Available statistics

• More details demand more resources, and results are more uncertain

• Possible with more details when discussing the present situation

• Small benefits from separating groups with large possibilities of substitution

• Technical limits for the number of groups in a general approach

• No technical limits when dividing into subgroups and for partial analyses

Classification used for the Norwegian projections 10-15 years ahead

• General approach

◦ 5 levels of education

- Primary education

- Secondary education, university preparatory

- Secondary education, vocational

- Education at bachelor level

- Education at master level

◦ Distributed over 28 educational groups

Classification used (cont.)

• Partial projections for specific groups

◦ Educations towards health and care

◦ Different kinds of teachers

• Common characteristics for these projections

◦ Borderlines between different groups

◦ Demographic development important for demand

◦ Demand mainly regulated by local and central government

Macroeconomic projections of employment by industry

• Time-series from the National Accounts and econometric connections

• 15 main industries in the model

• Level of production determined from demand except from resource based

industries

• Most important exogenous factors

◦ Demographic development

◦ Prices and activity in resource based industries

◦ International economic development, prices and rate of interest

◦ Economic policy including use of labour in the public sector

Employment by main industries (2017 = 1)

80

85

90

95

100

105

110

115

120

125

130

2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035

Extraction of oil and gas Government sector Private services

Building and construction Wholsale and retail trade Manufacturing

Projections by level and field of education

Two main components

• Change in employment between industries

• Change in composition within each industry

◦ Includes change in composition caused by technical progress

Composition by level and field of education

• Based on observation of recent changes for each industry

• Look at changes in composition between levels first

• Thereafter look at changes in composition between fields within each level

Change in composition by level of educationShare of total employment

0.00

0.05

0.10

0.15

0.20

0.25

0.30

2005 2010 2015 2020 2025 2030 2035

Primary and unknown Bachelor Master

Secondary general Secondary vocational

Projecting the labour force

• Labour force = Employed + Unemployed

• Population in working age from official projections 2018

• Labour market participation by age, gender and education

• Know the level and field of education for those in work

• Projection of education for natives and immigrants

Persons entering Labour forcePersons leaving

Composition of labour force

• Dependent on those entering and those leaving

• Educational level among new entrants is much higher than for

those who entered some decades ago

• Large changes over time in level and field of education

Secondary education

Secondary education

Labour force

Labour force by level of education

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Unknown Primary education Secondary general

Secondary vocational Bachelor Master

Inflow versus replacement demandEconomics and administration, bachelor level

• The number of new entrants is much

higher than the number of those who

leave

0

1000

2000

3000

4000

5000

6000

7000

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

Labour force Entering Leaving

Nursing and caregiving, bachelor level

• Only a few more entering than leaving

• The number of persons in the labour

force is almost constant

0

500

1000

1500

2000

2500

3000

0

20000

40000

60000

80000

100000

120000

201

6

201

7

201

8

201

9

202

0

202

1

202

2

202

3

202

4

202

5

202

6

202

7

202

8

202

9

203

0

203

1

203

2

203

3

203

4

203

5

Labour force Entering Leaving

How do we compare projected demand end supply?

• Aggregate labour force and employment simultaneously projected in the

macro model

• Demand and supply for different educational groups projected independently

• Comparisons indicates possible imbalances

• In the real world imbalances will be moderated

◦ Educational and labour market policy

◦ Educational choice

◦ Demand for close substitutes is affected

◦ Relative wages

Projections by level of education. 1000 persons

0

200

400

600

800

1000

1200

2010 2015 2020 2025 2030 2035

Primary and unknown, supply Upper secondary general, supply

Upper secondary, vocational, supply Bachelor, supply

Master, supply Primary and unknown, demand

Upper secondary general, demand Upper secondary, vocational, demand

Bachelor, demand Master, demand

Secondary vocational education towards manufacturing, building an construction and craftsShare of total labour force (17%)

Electronics, mechanical and machinery

Building and construction

Other crafts

0.166

0.168

0.17

0.172

0.174

0.176

0.178

0.18

0.182

2015 2020 2025 2030 2035

Supply Demand

Engineering and tertiary education in scienceShare of total labour force( 8% )

• Relatively strong growth in labour force

because several youths choose these

educations

• Demand is rather stable because

reduced activity in the petroleum

industry and production of equipment

and services towards this industry

outweigh increased demand in most

other industries

0.060

0.065

0.070

0.075

0.080

0.085

0.090

0.095

0.100

0.105

2015 2020 2025 2030 2035

Supply Demand

Nursing and caregiving, bachelorShare of total labour force( 3% )

• Demographic development

causes more old persons and

increases demand

• Labour force almost constant

because the number of those

entering corresponds to those

retiring

0.025

0.027

0.029

0.031

0.033

0.035

0.037

0.039

2015 2020 2025 2030 2035

Supply Demand

Tertiary education in economics and administrationShare of total labour force 6%

• A relatively strong growth in demand

compared to most other groups

• A large expansion of capacity in

education during last decades causes a

high number of new entrants compared

to the number of retirees0.060

0.065

0.070

0.075

0.080

0.085

0.090

0.095

0.100

0.105

2015 2020 2025 2030 2035

Supply Demand

Funding of Statistics Norway’s skills projections

• The Ministry of Education and Research

• The Ministry of Labour and Social Affairs

• The Ministry of Trade, Industry and Fisheries

• The Ministry of Health and Care Services

• The Norwegian Directorate of Health

• The Norwegian Labour and Welfare Administration

Government Committee on Skill Needs established 2017

• Provide the best professional assessments of Norway’s future skill needs

◦ Basis for national and regional planning

◦ Strategic decision making of both employers and individuals

• Annual report on skill needs

• Representatives from social partners, researchers/analysts and civil servants

from the Ministries

• Statistics, analyses and projections from Statistics Norway part of the

knowledge base

Thank you